11. The History of Foreign Aid Programs

The Marshall Plan didn’t help get Europe back on its feet: free markets did. The Plan was another failed giveaway program. The Plan’s disastrous legacy was the wrongheaded approach it inspired in foreign aid programs for the rest of the century.

Just throwing money at countries was not beneficial. Aid dependency made people political, not productive. The message that should have been sent was that prosperity follows from rule of law, respect for private property, and other institutional mechanisms on which the market order rests.

A study of ninety -seven countries, including Egypt and Zambia, revealed that foreign aid had retarded production and destroyed local incentives.

Lecture 11 of 14 from Tom Woods’ The Politically Incorrect Guide to American History lecture series.